Correlation Between Echo Investment and Stalprodukt
Can any of the company-specific risk be diversified away by investing in both Echo Investment and Stalprodukt at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Echo Investment and Stalprodukt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Echo Investment SA and Stalprodukt SA, you can compare the effects of market volatilities on Echo Investment and Stalprodukt and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Echo Investment with a short position of Stalprodukt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echo Investment and Stalprodukt.
Diversification Opportunities for Echo Investment and Stalprodukt
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Echo and Stalprodukt is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Echo Investment SA and Stalprodukt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stalprodukt SA and Echo Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Echo Investment SA are associated (or correlated) with Stalprodukt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stalprodukt SA has no effect on the direction of Echo Investment i.e., Echo Investment and Stalprodukt go up and down completely randomly.
Pair Corralation between Echo Investment and Stalprodukt
Assuming the 90 days trading horizon Echo Investment SA is expected to generate 1.32 times more return on investment than Stalprodukt. However, Echo Investment is 1.32 times more volatile than Stalprodukt SA. It trades about 0.01 of its potential returns per unit of risk. Stalprodukt SA is currently generating about -0.38 per unit of risk. If you would invest 446.00 in Echo Investment SA on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Echo Investment SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Echo Investment SA vs. Stalprodukt SA
Performance |
| Timeline |
| Echo Investment SA |
| Stalprodukt SA |
Echo Investment and Stalprodukt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Echo Investment and Stalprodukt
The main advantage of trading using opposite Echo Investment and Stalprodukt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Investment position performs unexpectedly, Stalprodukt can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Stalprodukt will offset losses from the drop in Stalprodukt's long position.| Echo Investment vs. Asseco Business Solutions | Echo Investment vs. Detalion Games SA | Echo Investment vs. Asseco South Eastern | Echo Investment vs. CFI Holding SA |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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